Morningstar(US:MORN)2025-10-30 20:17Financial Performance - Consolidated revenue for Q3 2025 was $617.4 million, an increase of 8.4% compared to $569.4 million in Q3 2024[123] - Operating income for Q3 2025 reached $127.8 million, reflecting a 10.6% increase from $115.5 million in Q3 2024[123] - Operating margin improved to 20.7% in Q3 2025, up from 20.3% in Q3 2024, indicating a 0.4 percentage point increase[123] - Total revenue for the nine months ended September 30, 2025, was $1,804.4 million, a 7.1% increase from $1,684.1 million in the same period of 2024[123] - Operating income for the nine months ended September 30, 2025, was $367.0 million, representing a 15.9% increase from $316.6 million in the same period of 2024[123] - Adjusted operating income for Q3 2025 was $150.6 million, a 15.6% increase from $130.3 million in Q3 2024, while for the first nine months, it reached $429.4 million, up 15.4% from $372.1 million[146] Cash Flow and Investments - Cash provided by operating activities was $195.7 million in Q3 2025, a slight increase of 2.0% from $191.9 million in Q3 2024[123] - Free cash flow for Q3 2025 was $160.1 million, up 2.8% from $155.8 million in Q3 2024[123] - Cash used for investing activities in Q3 2025 was $(33.0) million, compared to $14.1 million in Q3 2024, indicating a significant change[123] - Cash used for financing activities increased to $(188.1) million in Q3 2025, up 212.5% from $(60.2) million in Q3 2024[123] - Cash provided by operating activities decreased by 12.0% to $385.7 million for the nine months ended September 30, 2025, compared to $438.2 million in the same period of 2024[202] - The company generated free cash flow of $160.1 million for the three months ended September 30, 2025, reflecting a 2.8% increase from $155.8 million in the same period of 2024[202] Revenue Breakdown - License-based revenue rose by 6.4% in Q3 2025, driven by strong demand for Morningstar Direct Platform and PitchBook products[131] - Asset-based revenue increased by 1.1% in Q3 2025, primarily due to growth in Morningstar Retirement products[132] - Transaction-based revenue surged by 27.2% in Q3 2025, mainly attributed to Morningstar Credit revenue[132] - Organic revenue increased by 9.0% in Q3 2025 and 8.0% in the first nine months of 2025, driven by growth in PitchBook, Morningstar Credit, and Morningstar Direct Platform[135] - International revenue accounted for 29% of consolidated revenue in Q3 2025, with a growth of 11.8% driven by Morningstar Credit and Morningstar Direct Platform products[138] Expenses - Total operating expenses for Q3 2025 were $490.1 million, reflecting an increase of 8.0% compared to the previous year[139] - Cost of revenue increased by $19.0 million in Q3 2025, primarily due to higher compensation expenses[140] - Sales and marketing expenses rose by $7.6 million in Q3 2025, driven by increased sales commissions and marketing costs[141] Shareholder Returns and Debt - The company declared a quarterly dividend of $0.455 per share, totaling $19.0 million, payable on October 31, 2025[195] - The company has a total outstanding debt of $499.8 million under the Amended 2022 Credit Agreement as of September 30, 2025, with borrowing availability of $500.0 million[190] - The company repurchased a total of 1,538,103 shares for $414.7 million under the 2022 Share Repurchase Program as of September 30, 2025, leaving $85.3 million available for future repurchases[197] Acquisitions and Future Plans - The company expects to complete the acquisition of the Center for Research in Security Prices, LLC for approximately $375.0 million during the fourth quarter of 2025[200] - The company paid $39.1 million for the acquisitions of DealX and Lumonic Inc. during the nine months ended September 30, 2025[199] Tax and Compliance - The effective tax rate for the three months ended September 30, 2025, was 25.5%, reflecting an increase of 5.7 percentage points compared to the same period in the prior year[183] - The company was in compliance with financial covenants, with consolidated funded indebtedness to consolidated EBITDA calculated at approximately 1.0x as of September 30, 2025[194] Currency and Market Position - The company has a net currency position of $41.9 million in Australian dollars as of September 30, 2025[208] - The estimated effect of a 10% adverse currency fluctuation on operating income for the nine months ended September 30, 2025, is a loss of $3.2 million from other foreign currencies[208]